Study of Export-Import Bank and World Bank, Hearings Before ..., 83:2- ....

The CHAIRMAN. If there is no objection, I will put in the record at this time copies of questionnaires which were sent to economists, industry, banks, trade associations, farm associations, and labor organizations.

(The questionnaires referred to follows:)

THIS QUESTIONNAIRE SENT TO DOMESTIC AND FOREIGN CORPORATIONS AND INDIVIDUALS

GENTLEMEN: The Senate of the United States has adopted a resolution (S. Res. 25) which authorizes and directs the Committee on Banking and Currency to conduct a thorough study of the operations of the Export-Import Bank of Washington and the International Bank for Reconstruction and Development and their relationship to the expansion of international trade.

It is my understanding that you have had contact with the Export-Import Bank and that therefore you are in a position to assist us in gathering information and opinion about the bank. As chairman of the Banking and Currency Committee, may I respectfully suggest that you advise us as to the following:

1. The nature or purpose of your contact with the bank.

2. If you had correspondence with the bank, did you receive prompt and satisfactory replies?

3. Have you ever applied for a loan from the Export-Import Bank? 4. If so, has your application been granted or denied?

courteous and expeditious manner?

Was it handled in a

5. If a credit was authorized was it administered by the Export-Import Bank in an efficient manner?

6. Have you any specific complaints about the operations of the ExportImport Bank?

7. Has the Export-Import Bank aided or failed in properly financing and facilitating the export-import trade of the United States?

8. Has the bank assisted in developing and expanding the economy of foreign countries? Has it increased their capacity to purchase United States exports? 9. Have you any suggestions for changes or alterations in the policy or operations of the Export-Import Bank?

10. Has the Export-Import Bank facilitated the expansion of international trade in the past, and if so, how can it more adequately expand it in the future? Please do not feel limited to the points mentioned above. If you have any further information you would like to make available, feel free to do so as it will materially assist in our study of the bank.

If your answers concern matters that you feel are of a confidential nature, kindly note this in your reply as this study will be discussed in open hearings before the Banking and Currency Committee of the Senate of the United States.

May I suggest that you send your comments to us as promptly as possible and indicate whether or not you would be prepared to appear in person before our committee and testify with respect to this matter. We will notify you as to the hearing dates.

Your considered attention to this matter will be very much appreciated.
Sincerely,

HOMER CAPEHART.

THIS QUESTIONNAIRE SENT TO DOMESTIC BANKS

Gentlemen: The Senate of the United States has adopted a resolution (S. Res. 25) which authorizes and directs the Committee on Banking and Currency to conduct a thorough study of the operations of the Export-Import Bank of Washington and the International Bank for Reconstruction and Development and their relationship to the expansion of international trade.

You recall that the stated legislative purpose of the Export-Import Bank from its inception some 19 years ago to date is to aid in financing and to facilitate exports and imports and the exchange of commodities between the United States and other countries. The unchanging policy of the Congress has been that the Bank in the exercise of its functions should supplement and encourage and not compete with private capital, and that its loans generally should be for specific purposes and offer reasonable assurance of repayment.

Our study of the Export-Import Bank will be greatly aided if you would give us your considered and frank replies upon the following:

1. Has the Export-Import Bank been of assistance to clients of your bank?

2. Has it competed with private capital in your area?

3. Has it taken business away from your bank and, if so, how and to what degree? 4. Can the Export-Import Bank use the services of your bank more than in the past and, if so, how?

5. What position has your bank taken with respect to term loans, i. e., where repayment exceeds a term of 6 months?

6. Are you financing, without recourse, shipments to foreign countries payable over term periods?

7. In cases where you have acted for the Export-Import Bank in the operation of credits has your compensation been adequate, taking into consideration the risk factors involved, by the Export-Import Bank as a Federal agency?

8. Have you participated with the Export-Import Bank in any of its loans without the latter's guaranty? If so, was your experience satisfactory?

9. Do you consider continuation of the Export-Import Bank's loaning facilities essential in the interest of international trade?

10. Has the Export-Import Bank facilitated the expansion of international trade in the past, and, if so, how can it more adequately expand it in the future? This questionnaire is being sent to a number of our principal banks engaged in foreign trade. The answers our committee receives will help us in our studies and will be kept confidential unless permission be given to use their contents openly.

Your cooperation and early answer will be appreciated.

Sincerely,

HOMER CAPEHART.

THIS QUESTIONNAIRE SENT TO UNITED STATES FARM ORGANIZATIONS DEAR SIR: The Senate of the United States has adopted a resolution (S. Res. 25) which authorizes and directs the Committee on Banking and Currency to conduct a thorough study of the operations of the Export-Import Bank of Washington and the International Bank for Reconstruction and Development and their relationship to the expansion of international trade.

You recall that the stated legislative purpose of the Export-Import Bank from its inception some 19 years ago to date is to aid in financing and to facilitate exports and imports and the exchange of commodities between the United States and other countries. The unchanging policy of the Congress has been that the bank in the exercise of its functions should supplement and encourage and not compete with private capital, and that its loans generally should be for specific purposes and offer reasonable assurance of repayment.

It is the aim of the bank to develop, examine, and appraise all of the ascertainable facts and circumstances that might affect a proposed loan, including its importance to the economic stability of the foreign country, and to make loans only for purposes which will improve the economy commensurately with the total costs to be incurred. Normally loans are limited to the amounts required for the acquisition of products and services of United States manufacture or origin. The maximum obtainable participation by private capital is sought in connection with each loan.

The bank's funds are drawn from the Treasury of the United States and are limited to $41⁄2 billion in use at any one time.

Our study of the Export-Import Bank will be greatly aided if you would give us your considered and frank replies upon the following:

1. In what ways has the Export-Import Bank aided the American farmer? 2. In your opinion would the American farmer benefit from the continuance and expansion of the bank's role in financing foreign trade, or from its discontinuance or restriction?

3. Have the Export-Import Bank's loans and loan policies been effective in financing and facilitating exports and imports and the exchange of commodities? 4. Have these loans contributed to the expansion of sound international trade? 5. Provided that it can be done on a financially sound basis-i. e., as a reasonable banking risk-should public funds be loaned for the purpose of maintaining or expanding the international trade of the United States? If so, do you think the following types of financing justified:

(a) Exports of agricultural commodities?

(b) Exports of United States capital goods?

6. Is it sufficient justification for the use of public funds as in 5 (b) above, that the orders would help keep United States industry and workers employed?

7. Should public funds be used for loans where the principal consideration is that of helping a foreign country get on its feet economically and thus become a better market for United States products?

8. If you consider financing justified under the conditions of 5 (a) and 5 (b) above would it alter your opinion if the product of the enterprises abroad would be competitive with United States production? Would it remove your objection if the enterprise produced only for domestic consumption in the foreign country and not for export?

9. What part should the Export-Import Bank play in such a loan policy? Should it be the sole independent agency in the United States for such purpose? 10. If you do not believe public funds by way of Export-Import Bank loans should be used to maintain or expand our foreign trade, have you alternative suggestions?

11. Have you any suggestions whereby the Export-Import Bank can more effectively expand our international trade, be of greater aid to the American farmer, and help equalize the economic imbalance in world trade?

This questionnaire is being sent to a number of farm organizations. The answers which our committee receives will help us in our studies and will be kept confidential if the respondents so desire.

Your cooperation and early answer will be appreciated.

Sincerely,

HOMER CAPEHART.

THIS QUESTIONNAIRE SENT TO UNITED STATES LABOR ORGANIZATIONS DEAR SIR: The Senate of the United States has adopted a resolution (S. Res. 25) which authorizes and directs the Committee on Banking and Currency to conduct a thorough study of the operations of the Export-Import Bank of Washington and the International Bank for Reconstruction and Development and their relationship to the expansion of international trade.

You recall that the stated legislative purpose of the Export-Import Bank from its inception some 19 years ago to date is to aid in financing and to facilitate exports and imports and the exchange of commodities between the United States and other countries. The unchanging policy of the Congress has been that the bank in the exercise of its functions should supplement and encourage and not compete with private capital, and that its loans generally should be for specific purposes and offer reasonable assurance of repayment.

The bank's funds are drawn from the Treasury of the United States and are limited to $4 billion in use at any one time.

Our study of the Export-Import Bank will be greatly aided if you would give us your considered and frank replies upon the following:

1. In what ways has the Export-Import Bank aided United States labor? 2. In your opinion would United States labor benefit from the continuance and expansion of the bank's role in financing foreign trade, or from its discontinuance or restriction?

(a) Exports of agricultural commodities?

(b) Exports of United States capital goods?

6. Is it sufficient justification for the use of public funds as in 5 (b) above, that the orders would help keep United States industry and workers employed?

8. If you consider financing justified under the conditions of 5 (a) and 5 (b) above, would it alter your opinion if the product of the enterprises abroad would be competitive with United States production? Would it remove your objection if the enterprise produced only for domestic consumption in the foreign country and not for export?

11. Have you any suggestions whereby the Export-Import Bank can more effectively expand our international trade, be of greater aid to United States labor and help equalize the economic imbalance in world trade?

This questionnaire is being sent to a number of labor organizations. The answers which our committee receives will help us in our studies and will be kept confidential if the respondents so desire.

Your cooperation and early answer will be appreciated.

Sincerely,

HOMER CAPEHART.

The CHAIRMAN. If there is no objection, I will put in the record a cross section of letters responding to these questionnaires.

If there is no objection, I will also put into the record a tabulation of responses to those letters which has been prepared by the committee staff.

(The documents referred to follow :)

Hon. HOMER CAPEHART,

DOMESTIC CORPORATIONS

AMERICAN CAR & FOUNDRY CO.,
New York 8, N. Y., October 5, 1953.

United States Senate, Committee on Banking and Currency,

Washington, D. C.

DEAR SIR: We have given careful thought to your letter of September 3, 1953, in which you asked us to give you certain facts and opinions about our relationship with the Export-Import Bank of Washington. This has initiated considerable study and analysis on our part, as we feel that the Export-Import Bank has been a very important aid to export business and to the ability of certain countries to obtain necessary railroad equipment to keep their transportation systems in order.

We are primarily engaged in the business of manufacturing railroad rolling stock and spare parts therefor. Over many years we have sold substantial quantities of this equipment to the various countries of South America. In order to keep such equipment operating efficiently, these countries depend upon our company for supplying spare parts. During the last war, we were unable to devote any of our productive capacity to such equipment, and as a result, the need for new railroad equipment and spare parts in the postwar period was acute. Since 1945 the Export-Import Bank has financed sales of our equipment to Mexico, Ecuador, Chile, and Colombia. All loans were arranged directly by the countries involved, and our dealings with the Export-Import Bank in this connection were merely to ascertain if the money was available to pay for the equipment upon completion. At all times our dealings with the Export-Import Bank have been on a most satisfactory basis, and we have been extended every courtesy from their officers and representatives. It is our impression that the ExportImport Bank has been run with an efficiency equivalent to that of any of our large commercial banks. We feel, however, that the operations of the bank could be improved by certain changes in its rules which would recognize certain realities of the American manufacturer's export problems.

The majority of the products exported by our company are of special design for which no general market exists. The period of construction may take as long as 1 year. It is, therefore, our custom to secure irrevocable letters of credit from foreign customers to guarantee we shall be paid upon completion of construction and delivery. In those orders which have been financed by the ExportImport Bank we have been unable to obtain such security from the bank or a letter of guaranty from the bank that they would pay for the equipment when

completed. We have been forced to ask the customer to establish letters of credit or their equivalent with another bank to cover the products or take a risk we are not prepared to do. In fact the Export-Import Bank has warned us on occasion that our customers appear to have overcommitted themselves in their purchases against a given credit.

We believe that the Export-Import Bank should be allowed to issue letters of credit or their equivalent to American manufacturers exporting equipment to be financed by an Export-Import Bank loan, definitely earmarking such funds to the manufacturer's product upon completion. This is a common practice among our larger commercial banks, such as the Chase National Bank of the city of New York, the Guaranty Trust Co., of New York, the National City Bank of New York, and the Bank of America, NTSA, of California. It is logical that is is an essential part of export banking.

Our second suggestion is one which would make the Export-Import Bank more useful for the American manufacturer and for the foreign customer. It is our understanding that the Export-Import Bank was set up for the purpose of supplying credit to foreign countries for purchases in the United States when such credit was not available from the normal commercial banking sources in this country. In the past 2 years, American manufacturers have been losing a good deal of their foreign market because deferred terms of payment or time financing for such purchases were not available through normal commercial banking sources in the United States. A recent survey by this company of the major banks and insurance companies in New York City brought out the fact that it was the present policy of these institutions not to make loans to foreign governments or businesses except for very short periods and then only in a relatively few countries. This is particularly true concerning South American and Latin American countries. With the buildup of the European production facilities, we are faced with the loss of business not as much through a competitive situation as the fact that due to dollar-balance problems, many countries buy railroad equipment where the terms of payment are most lenient. Our competitors in Europe are in many cases able to offer South American customers equipment with a relatively small down payment and 5 or more years to pay the balance at 6 percent interest rates. The European manufacturer, in order to obtain business, approaches and gets from his government a commitment to carry or guarantee such loans. They then offer to the customer, who has requested a bid on the equipment, a package deal. In order to compete with this, we have had occasion to ask the Export-Import Bank on particular bids whether they would be willing to grant similar terms to a foreign government in conjunction with the purchase of equipment in this country. We have been informed that it is against the policy of the Bank to grant any form of loans unless requested by the foreign country concerned. We feel very strongly that the Export-Import Bank should be able to offer loans or guaranty of loans, provided it is satisfied with the credit of the country and the need for the equipment, upon request by the manufacturer, so that the manufacturer in offering the sale of his merchandise can assure the client as to the availability of dollars. At present all we can do is to give the country concerned a quotation on our product and tell them they must first request a loan from the Export-Import Bank if they want deferred terms of payment. Faced with other bids that offer the package deal, the business often goes elsewhere without due consideration being given by the buyer as to the quality and price of the merchandise involved. This results not only in the United States losing such business and the related employment, but the buyer concerned getting in some cases an inferior product.

I would be glad to appear in person before the committee if you feel I could add anything that would be of advantage to the committee in its studies.

Very truly yours,

JOHN F. BURDITT,

Treasurer.

Hon. HOMER E. CAPEHART,

AMERICAN & FOREIGN POWER CO., INC.,
New York, N. Y., September 21, 1953.

Chairman of the Committee on Banking and Currency,

United States Senate, Washington, D. C.

DEAR SENATOR CAPEHART: I am pleased to respond to your letter dated September 3, 1953, in which you make certain inquiries concerning my contacts with the Export-Import Bank of Washington. For convenience of reference your inquiries are reproduced below, followed in each instance by my answers thereto. 1. The nature or purpose of your contact with the bank.

42493-54-pt. 2—18

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